As accountants, we don’t always know the exact impact we’ve had on our clients. We might give them some advice or a useful report, but we don’t always know what’s happened next.
So we were surprised when a client told us the tax bill he had to pay was all our fault.
We’d been working with them for a couple of years and knew the business wasn’t doing brilliantly. Turnover was patchy, and gross profits around 15%. The client – who’s in the construction sector – said he was aiming for 20% gross profit, but hadn’t managed to achieve this.
But as we went through the accounts we saw that turnover in 2020 had doubled. Gross profit had leapt to 51% (hence the higher tax bill).
“When I asked how he’d managed to achieve that, he said it was my fault!” Giles says. “The previous year I’d run a BenchMark report for his business, comparing his performance to others in the same sector. We do this for all our clients. The report showed that the top performers were getting around 50% gross profit, way more than his 20% target.”
Sharing that simple figure changed everything
“When he realised what his expectations should have been, his mindset changed.” Giles comments. “Knowing that others were making such high profits showed him that he could do it too. Now he fights really hard for a 50% gross margin. And it’s paid off massively. In the first nine months of 2020 he made £100k profit. He managed to do this in the year that businesses struggled with the COVID-19 pandemic.”